The proposal had support from the Obama administration, but not Republicans.

A spokesman for Sen. Richard Shelby, R-Alabama, said today that Shelby "supports a permanent fix that protects both students and taxpayers."

He also said a proposal from Sens. Tom Coburn, R-Oklahoma; Richard Burr, R-North Carolina, and Lamar Alexander, R-Tennessee, provides "a sensible solution for all students and parents."

That proposal would set student loan interest by the U.S. Treasury 10-year borrowing rate plus 3 percentage points and direct any saving to deficit reduction.

But Senate Majority Leader Harry Reid, D-Nevada, opposed that legislation and legislation passed by the Republican House that would tie student loan interest to market rates without capping interest.

"If the legislation passed by House Republicans or the plan by Senate Republicans becomes law, student loan rates would more than double over the next few years as interest rates increased," he said. "We should support a plan that would be better for students, not worse for the students."